KAMPALA – Cabinet last week approved a new pension scheme that will see public servants contribute 5% percent of their salary to it
Under the scheme, which is similar to the National Social Security Fund (NSSF), 5% of a civil servant’s salary will be deducted every month and the Government will add an equivalent of 10% of one’s salary to make it a 15% monthly contribution.
Under the current arrangement, the government fully pays public servants when they retire in accordance with the number of years worked and the salary earned.
Government projects that proposed pension scheme will have grown to Shs1.5 trillion in the first five years.
Victor Leku-Bua, the ministry’s human resource management commissioner in charge of compensation, explained that the scheme will have an option to invest the funds and that this will enable the growth of the fund.
If all goes according to plan, the contributory scheme will be rolled out in the next financial year, 2021/2022.
Despite Uganda’s growing population and the consequent increase in the working population age, coverage of the pension sector remains dismal.
Uganda labour force stands at about at 17.2 million which 15.6 million are employed in both formal and informal sector, and thus eligible to pension savings. However, pension coverage is 1.97 million (including public service, national social security fund and a few voluntary occupational schemes) – representing only 12.6 percent of the estimated active labour force in Uganda.